When I was in elementary school my dream was to make a perpetual motion machine, which are commonly referred to these days as "over-unity" devices. I'm all for other people trying to do it, but I no longer feel the need to waste my time with it. Of course, there are loads and loads of people lacking a strong scientific background trying to come up with these devices, and as such it is useful to know a bit of the scientific background so we aren't so easily deluded into believing their claims. Personally I'm a fan of innovative approaches and casting much doubt towards commonly held assumptions, but there are definite limits to this concept - at some point, you are just wasting time trying to come up with results that have already been long known (and which were discovered by geniuses who got lucky, something unlikely to happen again to any naive experimentalist).
Conservation of energy is the first law of thermodynamics and fundamental to every physical science, it's shown up in every one of millions of experiments and is about as established as a theory gets. Even more, the theory is one that makes a lot of sense and is descriptive to the extent that it has encapsulated and explained every single experimental observation yet made. Of course, science hinges on the precision of explanation, which implies that experimentation outside common conception--a theoretical dictum such as Thermodynamics--is not a threat but either 1. A chance of showing that common conception is accurate, or 2. A chance at showing it is incorrect and must be changed to accommodate new observations. Quality observation is very difficult to do, and it is easy to make mistakes in measurement that will lead to erroneous results, as was the case with the famed events surrounding cold fusion. Scientists as a community realize this difficulty and thus relies on an unofficial system called peer-review. In attempting to submit your results to a reputable source, a small group of individuals including some in the field of concern reviews the document for possible experimentation errors. Rather than publishing it outright, the expectation is that you receive your returned paper with questions and concerns to which you respond or preclude publication with that journal. This kind of process is often not enjoyed by scientists, but I'd say on the whole it is accepted as important when not disheartening. Thus, with proper background, it makes sense that there was some controversy over cold fusion, because the researchers went to the popular media which lacks peer-review or the knowledge to vet the material. As it became more clear that such technology would revolutionize the world, it was also with growing disappointment as other scrambling scientists failed to reproduce their results. Thus also we can see the importance of proper procedure with science, and the reason pseudosciences always have air-time on the local news but not space in reputable journals. This too is why anything related to emerging science in mass media should be taken with serious skepticism (though if I take my science pants off I'd also argue that all mass media content should be avoided at all cost).
Perpetual motion now acknowledged as very unlikely, the closest we're going to get to "free energy" in the real world/foreseeable future is going to be nuclear power. That's not to say nuclear power is anything less than enough; the process converts mass directly into energy, and there is an incredible amount of energy stored in mass. Einstein's famous and very proven equation shows this clearly: Energy = mass * speed of light^2 aka E=m*c^2 (the c is thought to stand for celeritas, Latin for speed or swiftness). Thus, even the slightest amount of mass stores an amount of energy proportional to the speed of light squared, which is an Incredible amount; the Fat Man dropped on Nagasaki was the result of just ~1 gram (the same mass as about half of a US dime) of mass being turned into energy.
This is actually really easy to calculate with the help of google's calculator, since google is just awesome like that. The wikipedia article says Fat Man released about 88 terajoules of energy. Since we know energy and c, rearrange to solve for mass:
E = m c^2
E / c^2 = m
and simply google "88 terajoules/(c^2)" (or clicky here).
So the whole bomb weighed over 4,000,000 grams... had all that mass been turned to energy there would probably no longer be a place called Earth. Likewise, my body mass (and I am a rather Skinny Man) converted directly into energy would be about 74,000 times more powerful than Fat Man. Thus, one could guess that the next greatest energy discovery be how to turn some "more stable" mass (as in not plutonium) into energy by nuclear fission, which is the idea behind cold fusion. Cold fusion is generally considered impossible, but some researchers continue to look into it.
Electromagnetism was discovered in the early 1800's, so it's pretty safe to say that any secret way to get free energy with magnets/electricity would've been figured out by now, particularly given that we have explored electromagnetism (EM) at the most fundamental (quantum) level; EM is one of four fundamental forces in physics: strong nuclear, weak nuclear, EM, and gravity. Since we're on a physics roll, connecting these four forces (referred to as unification) into a single theory is the holy grail of physics research today, and the person who figures it out will probably become the most famous scientist in history. String theory (actually theories) is an untestable proposal for the unified theory. Since they are untestable, they aren't considered scientific and thus not viable candidates until tests are developed.
Back to nuclear power: recently a story in the local paper had our new governor Gary Herbert saying much about the role of nuclear power in future infrastructure. This all stems from the current Energy Secretary, Steven Chu, pushing for nuclear reactors to be the future energy source for the USA. It has been suggested that the US has wasted the past 30 years by not developing energy infrastructure based on nuclear power, and this is true. Nuclear power is the cleanest, most sustainable and efficient way to get power. Likewise, there is a lot of opinion that the explosive growth seen in China over the past few decades has been fueled by nuclear power, and it isn't difficult to see that without this kind of powerful technology for power generation the rate growth couldn't have had such a pace.
There have been plans put forth for miniature reactors, termed "neighborhood nuclear reactors" or "nuclear batteries." Residing in a 10 foot cube of heavily reinforced concrete, the reactor can provide power for 20,000 homes for 10 years. Divided evenly between 10,000 households, the projected cost for a decade of electricity is $250. Backyard reactor sounds like a bad idea? Absolutely not. Even if a group were able to secretly reach the buried cube, they would need to penetrate several feet of reinforced concrete. Assuming they were able to do that, they would need to do it many times as each reactor contains a diminutive amount of nuclear material. They would be better off just buying some on the Internet, which anyone can do (I used to have a bookmark for an online store with plutonium available for purchase, but alas, no longer). Assuming these would-be idiot terrorists had secured enough nuclear material, they would then need the resources of a nation to refine it into something weapons-grade, not to mention the necessary detonation device. Thus, there is no risk of terrorism aided by nuclear batteries, QED.
What about catastrophic failure, as in Chernobyl or 3-mile island (which is when we stopped building reactors)? Not possible. First, nuclear power technology has come a Long way since the 1970's, just like Everything else. Second, the mini-reactors are closed systems with no moving parts, there is no way for them to catastrophically fail. Third, there isn't enough radioactive material in them to do much damage in the impossible case they were to fail.
Quick digression: radioactivity gets a bad rap because of a few common misconceptions, so it's re-education time! Everything you see is radioactive! Color is simply a form of electromagnetic radiation in the range of frequencies we happen to be able to see... in other words, light is radiation. Heat can also be radioactive, which is why something "glows red hot." In fact, there is a whole construct called the electromagnetic spectrum, on which all radioactive frequencies are described. On this spectrum resides color (light), micro waves, radio waves, gamma rays, X-rays, and so on. Thus there is an important distinction to be made with different types of radiation, and it's very simple: there is ionizing radiation, and there is non-ionizing radiation. Things like light and radio waves are non-ionizing, which means there is no risk of cellular damage. You can think of it in terms of light: light can't penetrate a piece of paper (otherwise it would be invisible) much less your skin, and neither can many other forms of radiation. On the other hand, there are very powerful forms of radiation that can ionize. These compact rays of energy are so powerful and concentrated that they literally knock atoms out of molecular bonds, and this is a bad thing for we cellular/molecular creatures. A small dose of ionizing radiation will probably not have major effects, which is why it is considered ok to have an X-ray done every once in a while. A large dose of ionizing radiation will completely disrupt the cellular processes that allow a living thing to live, thus able to cause extremely fast death. However it is not even necessarily to be considered a negative thing, ionizing radiation--Carl Sagan postulates in Cosmos that the occasional radioactive wave that manages to penetrate the ozone layer may have been critical in the role of evolution, by knocking apart random pieces of DNA with possibly beneficial side effects. By analogy, we might imagine a lucky hominid named Peter Parker getting hit by an interstellar wave in such a way that he gains super-human, spider like abilities, making him an exceptionally viable reproductive candidate (all the ladies know Spider Man is hawt). Thus evolution could depend on cosmic rays for random mutation, with similar albeit far more subtle results. Amazingly, simple forms of life have been found that can repair cellular damage due to radiation. For one, this opens the possibility of anti-radiation medications, but this also means that were humans to wipe out most life on Earth in a global nuclear war And the ozone completely wiped out, other forms of life would continue despite the heavily irradiated environment, ionizing and otherwise.
Nonetheless, nuclear power is the only viable energy source for the very near future. And it can't happen soon enough, when you consider the amount of pollution from coal and fossil-fuel power plants... which is so extensive that nearly every body of water is severely contaminated by mercury, a dangerous neurotoxin. In case you don't know the connection, coal fired power plants are by and far the greatest source of mercurial emissions, about 50 Tons released into the air each year according to EPA estimates from 2000. I would much rather have spent nuclear material buried in my literal backyard than be breathing mercury. Let's get the ball rolling, folks!